California sued over gig economy law. What Uber and Postmates say about AB 5

Uber and Postmates sued California on Monday over Assembly Bill 5, the state’s effort to bring employment protections to workers in the so-called gig economy.

The ride-sharing tech giant and food-delivery service became the latest to challenge AB 5, joining the trucking industry, organizations representing freelance journalists and others. The landmark legislation, signed in September by Gov. Gavin Newsom, is set to go into effect Jan. 1 and is already facing the prospect of a ballot fight launched by Uber and others.

In a lawsuit filed in U.S. District Court in Los Angeles, Uber Technologies Inc. and Postmates Inc., a delivery service based in San Francisco, said the law is unconstitutional and will “stifle workers and companies in the on-demand economy.” They argued that the gig economy gives its workers, who have been classified as independent contractors, “opportunities to earn money when and where they want, with unprecedented independence and flexibility.” The lawsuit seeks an injunction blocking implementation of AB 5.

The plaintiffs in the suit include Lydia Olson, an Uber driver from Antelope; and Miguel Perez, a Postmates driver from Southern California.

The law essentially compels companies such as Uber to treat their workers as employees and provide benefits such as health care, sick leave and workers’ compensation. The bill was supported by union leaders.

Uber and its competitor Lyft, along with food-delivery company DoorDash, had already threatened a ballot measure over AB 5, saying they could spend as much as $90 million on a political challenge to the law.

In the lawsuit, Uber and Postmates complained that AB 5 is flawed in part because of its “laundry list of exemptions,” which includes travel agents, commercial fishermen and others.

“There is no rhyme or reason to these nonsensical exemptions,” the lawsuit said.

The bill’s author — Assemblywoman Lorena Gonzalez, D-San Diego — blasted the lawsuit.

“The one clear thing we know about uber is they will do anything to try to exempt themselves from state regulations that make us all safer and their driver employees self-sufficient,” Gonzalez said in a prepared statement. “In the meantime, Uber chief executives will continue to become billionaires while too many of their drivers are forced to sleep in their cars.”

The lawsuit says Olson, the Uber driver from Antelope, needs flexible work hours so she can care for her husband, who has multiple sclerosis. An MBA graduate of the University of California, Davis, Olson runs a consulting business and “values the ability to use Uber to supplement her income as needed, sometimes a little and sometimes a lot. That would not be possible if she had a fixed schedule, needed to work a certain number of hours per week, or was prevented from working a certain number of hours in a given week,” the suit says.

This story was originally published December 30, 2019 at 5:29 PM.